H-1B visas benefit Indian outsourcing firms

Bill Gates is testifying before the U.S. House Committee on Science and Technology this week, lobbying Congress to expand the number of H-1B visas made available in the U.S. in 2008. Congress normally caps H-1B visas at 65,000 per year. Gates is an outspoken critic of the Visa cap restrictions.

His argument is that the U.S. does not have sufficient numbers of technology savvy developers and programmers to enable U.S. businesses and research facilities to grow and be able to compete on a global scale. Gates is supported by Christopher Hansen, President and CEO of the IT industry trade association AeA. Hansen lent his support today to the claim that for every H-1B position requested, U.S. companies increase their employment by five workers.

But who are these “five workers?” Are they U.S. workers? One need only look at the long-term high unemployment rates in the U.S. employee IT sector and the troubled U.S. economy to answer this question. Is it that there are not sufficiently capable U.S. developers and programmers available, or that the companies who are crying to increase the H-1B numbers of Visas do not want to pay competitive wages to U.S. employees? Off-shoring and outsourcing of labor does lower labor costs.

H-1B visa recipients can stay in the U.S. for up to six years on an H-1B visa. But who pays for these lower labor costs ultimately? Answer: In the long term it is U.S. employees, communities and the U.S. economy. If there is a shortage of qualified workers, why aren’t these same companies trying to create the next generation of U.S. employees, starting with high school students and technical training institutes?

Who ultimately benefits from the issuance of the H-1B Visas? Yes, the contractors who are brought into the U.S. benefit, and so do the U.S. companies who bring them in; but it is mostly the offshore outsourcing firms who receive the lion’s share of the financial pie.

Last year India-based offshore outsourcing companies were the top ten recipients of H-1B visas and the top twenty recipients were mainly India-based offshore companies and large U.S. technology companies, which gobbled up 15,640 H-1B visas last year. These same companies continue to be awarded H-1B visas every year and have been for many years.

The head of the National Foundation for American Policy, Stuart Anderson, claims that there is a statistical relationship between H-1B use and the creation of new jobs at the companies who rely on the H-1B visas. Anderson says that research he conducted using public Web-based ‘help wanted’ ads and reported data on employment correlate to this fact.

Let’s hope that Mr. Gates does not get his way with Congress this round.